2016-03-14

Hebei Governor to Steel Industry: I'm Worried For You

Governor Zhang Qingwei express his views: From an economic standpoint, even the best thing, if all we do is solve overcapacity, we are all "finished." Hebei provincial government is now preparing a document on overcapacity capacity, a total of 34. Iron and steel enterprises hoped to transition as soon as possible, do not crowd into an industry.

Zhang Qingwei said, the market will configure resources, but the Government's guidance is necessary. In addition, Zhang Qingwei said the market "new normal" and the old market are two different markets, Meng Lanzhi [founder of Hebei Tianzhu Iron and Steel] said the role of the market to determine, precisely contrary to the new market conditions. If you hold to the traditional way, even with good managers, also to maintain good business sales, the majority of Hebei steel companies would be "unbearable."

"I hope you are able to take the lead in these entrepreneurs to adapt to the new normal, and more talk about how innovation, research and development and transition." Zhang Qingwei said, "is always talking about these things, I'm worried for you."

This next statement is a little worrisome for those expecting global rebalacing, as imports of advanced industrial goods are slated for replacement if it can help absorb domestic production:

In steel, for example, on the one hand capacity 1.13 billion surplus from the total lack of structural aspect exists. China also imports than 12 million tons of steel each year, which is more than 12 million tons of steel ships, aircraft, aircraft carriers, high-end medical steel, special steel. Exports and imports are almost the same, but the value of imports of iron and steel is almost twice the export value of iron and steel. But according to the amount of decomposition around how much tons capacity, not a fundamental solution, to conduct the steel structure of this structural change.